WSJ: Investors Flock to Bond ETFs at Record Pace

Investors are snapping up bond exchange-traded funds (ETFs) at the fastest rate since the investment vehicle was introduced in 2002.

The interest in bonds has been sparked by signs of economic weakness, turmoil in emerging markets and a desire for investments that produce income, The Wall Street Journal reports.

Bond ETFs listed on U.S. exchanges have seen an inflow of $16 billion this month through Feb. 21, according to TrimTabs Investment Research. That amounts to almost twice the prior top monthly inflow of $8.4 billion in May 2012, The Journal reports.
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Treasury yields ended last year on a rising trend, with the 10-year yield closing at 3.03 percent. And many bond market participants expected more increases this year, as the Federal Reserve continues to taper its bond buying.

Instead, yields have fallen, as some economic data came out weaker than expected and currency crises broke out in emerging markets.

The 10-year Treasury yield stood at 2.71 percent early Wednesday.

ETFs that invest in Treasurys have seen the most inflow, as investors want safety, according to The Journal.

Some investors may even be taking money out of the record-high stock market to put into Treasurys.

"[Economic] data of late have been on the weaker end of expectations," Dan Mulholland, head of Treasury trading at BNY Mellon Capital Markets, tells Bloomberg. "Equities are at all-time highs. Maybe people are taking chips off the table and putting some cash in Treasurys."